Heads roll at the Department of Slogans

The Coalition's pledge to ‘end the waste’ through ‘natural attrition’ differs little from Labor’s ‘efficiency dividend’. It’s one of many lines that may bring Tony Abbott more trouble than expected.

A dangerous delusion prevails amongst Coalition ranks that most Australians voted for the Abbott government's policies rather than against the sorry circus that Labor had become.

Why is that dangerous? Because they will tend to take their list of 'mandates' more seriously, and interpret them more literally, than most of their voters would wish.

The election was won on the thinnest of spin, simply because Labor was doing such a good job of alienating voters with Kevin Rudd's scary clown routine.

The problem is that literally-minded Libs and Nats will now thump the table and say “Honour the slogans!” – a pretty catchy slogan in its own right.

But though lefties constantly question Tony Abbott's intelligence, behind the slogans and stammering repetition of his on-camera persona is a ruthless pragmatist who has no intention of ruining Australia to honour the three-word lines his party's extensive focus group research distilled over the past three years.

Thus 'stop the boats' means 'stopping quite a lot of boats, but no planes'. It's a step forward.

'Scrap the tax' really means 'use $3.2 billion of federal taxes over four years to fund Direct Action'. Well, that's cheaper, and should at least allow us to tell global fora that 'Australia is doing something!'.

'End the debt and deficit' means 'have a huge deficit and gross debt blowout in the first year to avoid political embarrassment closer to the next election'. While the timing is pure politics, few economists think borrowing a bit more is a bad idea, particularly if it's used to patch up our creaking infrastructure.

And 'end the waste' means ... well, we'll see what it means below.

National papers are today running a 'news' story that Labor planned to cut more jobs that Tony Abbott. Shock, horror! If only we knew that before!

Actually, Business Spectator wrote about it many times – see, for example, 2012 coverage of Labor's stringent public sector 'efficiency dividend' here and here.

Labor was cutting departmental budgets by 2 per cent a year to whittle down some early GFC hiring splurges, and from the May budget in 2012 was accelerating that to 2.5 per cent. Public servants hated those cuts, but they were responsible.

Former Treasurer Wayne Swan got none of the credit for them because of some hefty and unexpected revenue writedowns that the Politifact web site agreed at the time were genuinely out of the blue. Journalists focused on the budget deficit blowout, not Labor's rapid fiscal consolidation.

Treasurer Hockey is now dealing with the same revenue-side problems, only he has the luxury, for a while, of blaming Labor's inability to fix the structural deficit built into the federal budget by the series of tax cuts begun by Peter Costello.

Today's 'news', therefore, is simply a quantifying of Labor's aggressive public sector job cuts. It was set to cut 14,500 through the efficiency dividend, which is just a bit more than Abbott's promised ‘natural attrition’.

It's a lovely term, 'natural attrition' – as if the gently lapping waves of the private sector coax away senior bureaucrats into a blue ocean of opportunity. No redundancy packages to fund. No hard feelings. It's natural.

Or is it? Fairfax papers reported two weeks ago that "251 public servants had left their jobs since the change of government and most of them pocketed redundancy payments as they went ... and hundreds of public service contractors and temporary staff in Canberra are facing a potentially bleak Christmas after being told by their employers during the past few days that their contracts cannot be renewed under the government's new hiring freeze".

And if your department is chopped or subsumed – the Climate Change Authority is going, the Department of Climate Change has been gobbled up by the Department of Environment, and AusAID is now within the Department of Foreign Affairs and Trade – expect something 'natural' to happen to your contract.

But the really big question raised in the papers today is whether Abbott's 12,000 is in addition to Labor's planned 14,500 job cuts.

Of course it's not. Abbott, the pragmatist, wishes to move staff to his priority areas – border protection, developing northern Australia, reinvigorating small business and so on – not create an army of unemployed public servants, in this most uncertain of economic environments.

'End the waste' was just another slogan the Coalition was not challenged on during Labor's spectacular implosion at the 2013 election. The final public sector job cuts may be more than 12,000, given Hockey's horror revenue problems, but not much more.

IMPORTANT: This information has been prepared without taking into account your objectives, financial situation or needs and you should consider if the information is appropriate for you before making an investment decision. Unless otherwise specifically stated or disclosed (such as the InvestSMART Diversified Portfolios Product Disclosure Statement), neither InvestSMART Financial Services Pty Ltd nor any of its Related Companies make any recommendations as to the merits of any investment opportunity referred to in its emails or its related websites. Product disclosure statements for financial products offered through InvestSMART can be downloaded from this website or obtained by contacting 1300 880 160. You should consider the product disclosure statement before making a decision about the product. All indications of performance returns are historical and can not be relied upon as an indicator for future performance.